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commission launches a major initiative to modernise state aid control

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10 May 2012

The European Commission has launched a major initiative to reform and modernise state aid control.
The key elements are:

state aid control must support sustainable growth by discouraging aid that doesn’t bring added-value and distorts competition. The Commission will develop common principles for assessing national projects and will revise some existing texts

state aid enforcement must focus on cases with the biggest impact, ensuring stronger scrutiny of larger aid, enquiries by sector and simplification of exemptions, especially the General Block Exemption Regulation – but Member States must improve submission quality and compliance with EU law

streamlined procedures for quicker decisions and rules and concepts will be better explained.

State aid rules are notoriously complex and difficult to grasp. This review has unsurprisingly been triggered by European economic difficulties; anything which makes the regime simpler and more efficient has to be welcomed. However, the reform package won’t be in place until the end of 2013 at the earliest. It may be too little, too late.

The Supreme Court in Tillman v Egon Zehnder Ltd has determined that where post-termination restrictive covenants (i.e. “non-compete” clauses) in employment contracts go further than reasonably necessary to protect an employer’s business interests, it can apply the ‘blue pencil test,’ severing the offending words and leaving the remaining enforceable clause in place.

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